Unemployment

Roy Morgan reckons the unemployment rate is 16.8%.

The unemployment and under-employment rate they estimate to be 27.4%.

I hope they are right – because I reckon that number is far too low. Here is some research undertaken by Jonathan Dingel and Brent Neiman from the University of Chicago that estimates that only 37% of jobs in the US can be plausibly done from home.

Evaluating the economic impact of “social distancing” measures taken to arrest the spread of COVID-19 raises a number of fundamental questions about the modern economy: How many jobs can be performed at home? What share of total wages are paid to such jobs? How does the scope for working from home vary across cities or industries? To answer these questions, we classify the feasibility of working at home for all occupations and merge this classification with occupational employment counts for the United States. Our classification implies that 37 percent of U.S. jobs can plausibly be performed at home. We obtain our estimate by identifying job characteristics that clearly rule out the possibility of working entirely from home, neglecting many characteristics that would make working from home difficult.

That being the case – it is very likely that the unemployment rate (if it measured whether people were doing actual value-adding work – it doesn’t, but that is another debate) is much, much higher than either 16.8% or 27.4%.

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19 Responses to Unemployment

  1. Terry

    The “unemployment rate” must have added to it, “the cost of government rate”: all of those “employed” (ie seconded from the otherwise productive capacity of the economy) to administer the wheels of government.

    We could have an unemployment rate of zero, simply by having the government continue to borrow on behalf of my kids and doling out $750 a week of their money to no doubt “very worthy recipients” today.

    How many can we fit in the public trough before everyone drowns.

  2. Rafe Champion

    You could add a massive number of government and university employees who are under-employed, like the army of over-paid dead weight university administrators.

    The Morgan figures show just as many who as many under-employed as employed and under-employment was always the elephant in the room of the official rate of unemployment.

    There must be a lot of people still employed doing very little who are kept on out of loyalty by employers who are bleeding to keep valued staff engaged in the hope of better times.

    There is also the rush of people to Centrelink to pick up the extra bigger unemployment benefit, it is well known that a lot of people who can scratch a living by a mix of legal and not so legal activities don’t bother with Centrelink because they have to waste time and money pretending to find work.

    And then there are all the business owners who have suddenly become unemployed.

  3. Judith Sloan

    Sinc. There are plenty of people still going to work. Mining, construction, health care, ag, manufacturing, utilities. We should do the math.

  4. Rafe Champion

    And the university administrators!

  5. Crossie

    Working from home isn’t all it’s cracked up to be, it actually takes twice as long. Morning briefing meetings that used to take five minutes are now half an hour zoom sessions. Then meetings with supervisors that take an hour per day when previously it was two hours per month. And being swamped in a flood of emails …

  6. Struth

    What about the sole traders and small business owners, who may have no work now or very little, from the flow on of closing other businesses.
    You don’t just walk away from a fishing trawler because the closed down restaurants don’t take your seafood anymore.
    You pay the cost for refrigerated storage and hope the madness ends within days.
    And as no one will soon be able to afford seafood, and you go bankrupt in a few weeks from now, your deckhands not laid off just yet.
    Your figures just yet are pointless.
    Wait a couple of weeks.

  7. 2dogs

    You don’t just walk away from a fishing trawler because the closed down restaurants don’t take your seafood anymore.
    You pay the cost for refrigerated storage and hope the madness ends within days.

    There’s still a market for your product. People aren’t eating less. They are just not going to restaurants.

  8. nb

    The following article presents the skeptical case regarding the Wuhan lockdown.
    https://streetwiseprofessor.com/bullshit-numbers/

  9. Iampeter

    That being the case – it is very likely that the unemployment rate (if it measured whether people were doing actual value-adding work – it doesn’t, but that is another debate) is much, much higher than either 16.8% or 27.4%.

    Yep. We are in uncharted waters here.

    Side question: do the bureaucrats, that work at any of the myriad of pointless government departments that shouldn’t even exist, get counted as “employed?”

  10. John Bayley

    We could have an unemployment rate of zero

    Well this was exactly how the communist countries in Europe attained 0% unemployment back in the day.
    First they made it illegal to be without a job. To prove one’s employment status, a stamp in one’s ID document had to be produced on request by the cops and such like.
    Then they ‘created’ lots of jobs equivalent to digging holes and filling them back in. Private enterprise was not allowed, so this was easy to do.
    Not dissimilar to how the QLD government does it with their public service.
    Bingo! No unemployment.
    The only problem was that ultimately the system went broke.
    Which of course no Keynesian economist would ever see coming.

  11. Entropy

    Crossie
    #3403431, posted on April 10, 2020 at 7:24 am
    Working from home isn’t all it’s cracked up to be, it actually takes twice as long. Morning briefing meetings that used to take five minutes are now half an hour zoom sessions. Then meetings with supervisors that take an hour per day when previously it was two hours per month. And being swamped in a flood of emails …

    Plus Microsoft teams messaging and Video chats, Skype, FaceTime and phone calls. Seriously, my days starts at 6:00am and finishes around 8:00pm. Including weekends (today I am trying to not do any work, not logging in and not looking at emails. Well, I have looked at emails already, but still.

    I would say in my public service team the only ones with less work than normal would be the graduates. It’s a bit hard to keep work up to them as they need supervising. Everyone else is hammer and tongs. I am getting more out of the program people too who are contract as they can work around the kiddies. Probably fearful some stupid Treasury boffin will get a vacuous politician to say something like “No contractors! No contractors!” when the reckoning from this current over step starts happening.

  12. Sinclair Davidson

    We should do the math.

    I spent the whole of yesterday afternoon trying to track down electricity demand data to match to employment data and then reverse out a change in employment figure – like that guy in the US has done.

    Unfortunately electricity demand data can be obtained in 30 minute slices only (that I could find) and cleaning it up to do the analysis was going to be too tedious (for me anyway).

  13. Sinclair Davidson

    And the university administrators!

    Well, yes. Universities are still operating and frantically moving classes etc online. Many of my colleagues are working like trojans to switch over to an entirely different delivery model, in real time. While doing it from home with fewer resources than they would have at the office AND soon will be doing that while also doing the jobs of school teachers in terms of home schooling. So academics are educating Australia’s young adults while also educating their own children.

    As you know – reverse engineering is a lot harder than a fresh roll-out.

  14. Snoopy

    I would say in my public service team the only ones with less work than normal would be the graduates. It’s a bit hard to keep work up to them as they need supervising.

    Yes, you can’t send them out to get coffee when everyone is working from home.

  15. Rafe Champion

    What Iampeter said!

    As to the universities, I am not poking a stick at the teaching staff, it is the administrators who proliferated in number and remuneration in the wake of the Federal takeover of higher education.

    On the teaching staff of course i have mixed feelings, depending on what they are teaching.

  16. flyingduk

    Roy Morgan reckons the unemployment rate is 16.8%.

    The ‘unemployment rate’ is meaningless: what matters is the *employment rate*. If you assume, as a first order approximation, that anyone who is not currently working is instead being supported by someone else who is (arguably a fair assumption, given the paucity of savings at all levels), the ’employment rate’ before all this began was in the 60% range. It must now be below 50%. That means the ‘unemployment rate’ is actually over 50%.

  17. Rafe Champion

    I want to know how many of the people who flocked to Centrelink the moment the benefit increased were technically entitled to payments but couldn’t be bothered spending the time and money applying or pretending to apply for jobs they wouldn’t get or didn’t want to do.
    And how were they supporting themselves? I expect by a mix of family support, odd jobs for cash and a bit of petty larceny.

  18. Squirrel

    “….if it measured whether people were doing actual value-adding work – it doesn’t, but that is another debate….”

    When reality reveals itself to be somewhat more limp than the snap-back/bounce-back currently being talked up, I think there will be many who will come to regret the demands for a comprehensive lock-down – employers (of the non-taxpayer funded variety) will have a sharper view of what can be done without, and will need to act accordingly in a much more constrained world.

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